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"We didn't want to make this a thingy," Binance CEO Changpeng Zhao posted Monday on Twitter, a week after making the change.
Binance, the world’s largest crypto exchange by trading volume, is reducing the maximum leverage users can use to trade futures contracts, a day after derivatives exchange FTX announced the same change.
The new limit is 20 times leverage, the exchange's founder and CEO Changpeng Zhao said in a tweet Monday, down from 100 times.
Binance imposed the limit on new users on July 19, and will gradually expand the move to all users, Zhao said.
FTX CEO Sam Bankman-Fried announced a similar change is taking place on his platform in a tweet posted on Sunday.
Zhao didn't state the reasoning behind the decision, but said that upcoming changes for existing users were "in the interest of consumer protection."
A July 23 New York Times article criticized high leverage trading in crypto as risky. The article implied impending regulatory moves against high leverage margin trading, citing Timothy Massad, a former U.S. Securities and Exchange Commission chairman.
Binance's Zhao acknowledged that "volatility is amplified by the leverage," according to the New York Times article.
Bankman-Fried said in his Twitter thread announcing FTX's change that high leverage is a small part of positions, not a big contribution to volatility, and that many arguments against it "miss the mark."
Exchanges are likely worried about the regulatory screws tightening on margin trading. Huobi suspended the service to Chinese users in June.
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